Empire Group Urges Pataki to Release Funds

The head of a group vying to take over the Thoroughbred franchise from the New York Racing Association is urging Gov. George Pataki to release already-promised state funds to the financially ailing franchise holder.

Empire Racing Associates on Oct. 13 took the effort up to Pataki to push for his involvement in the looming cash flow crisis at NYRA. Last month, Empire pressed the head of a state board overseeing NYRA's finances to release $19 million in funding to help keep NYRA from declaring bankruptcy

But NYRA officials said the Empire group revealed less helpful intentions in the letter to Pataki. "Our review of the relevant statutes concludes that an approved management agreement is not a statutory pre-condition of releasing additional state funds to keep racing solvent," Jeff Perlee, Empire's chief executive officer, wrote to Pataki.

NYRA officials took that sentence to mean that Empire does not want NYRA to get its pending contract with MGM Mirage approved by the state; MGM is NYRA's partner in the Aqueduct VLT casino project. State officials have maintained that, without a final government sign-off of the VLT project, there would be no access by NYRA to the $19 million bailout. NYRA, in turn, has said it cannot go forward with the VLT project unless the state signs off on the MGM deal and that, without the bailout money, it risks running out of money by December.

Perlee, who several years ago worked for Pataki as his state lottery division director, urged Pataki to pay NYRA the $19 million "so that the troubles of the current operator will not cause any further irreparable harm to this vital New York industry.''

But Bill Nader, a NYRA spokesman, said the letter made "clear that Empire is publicly opposed to NYRA getting a VLT revenue stream activated at Aqueduct.'' Nader said the long-stalled project is expected to provide annual revenues of $435 million to the state for education funding and $60 million for horse owners and breeders.

"So - unless someone is anti-taxpayer, anti-education, and anti-racing - you would have to think that there could be no opposition to moving forward on this project,'' Nader said.

Empire officials disputed NYRA's interpretation of the letter. "Empire very much wants VLTs up and running. The issue here is can and should the state release money now while they continue to work around NYRA's problems. We believe they can and they should,'' said Bob Bellafiore, an Empire spokesman.

NYRA and Empire - whose partners include Magna Entertainment, Churchill Downs, and a group of New York horsemen - have been stepping up their rhetorical wars in recent weeks as a state panel works to conclude its work on the bidding process for a new franchise holder. The Ad Hoc Committee on the Future of Racing met again Oct. 13 to go over the four bids received for the franchise to operate Aqueduct, Belmont, and Saratoga racetracks.

A decision could be coming within weeks, industry officials believe, as the group rushes to put out its non-binding recommendation while Pataki is still governor. A state official said there are at least two more meetings – October 20 and 27 – planned by the committee and that a decision is not imminent.

NYRA officials have been threatening filing for bankruptcy if the state does not come through with the $19 million in bailout money approved earlier this year by the state Legislature and Pataki.

"A decision by the NYRA Board of Trustees to seek bankruptcy protection would impose great hardship on labor, individual horsemen and breeders, and thousands of families whose livelihood depends on racing," Jeffrey Tucker, Empire's chairman, said in a written statement.

"I urge the state to take the appropriate measures that will keep our racetracks open until such time as a new, financially capable operator can be selected.''

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